SEC Announces its 2026 Priorities for Examinations

On November 17, 2025, the SEC Division of Examinations announced in 2026 priorities.  This blog post summarizes certain sections of the SEC’s release.

I. Investment Advisers

A. Adherence to Fiduciary Standards of Conduct

• The Division will review advisers’ adherence to both the duty of care and duty of loyalty obligations (as defined under the Investment Advisers Act of 1940 and related rules). SEC+1
• Key focus areas:
  • The influence of advisers’ financial conflicts of interest on providing impartial advice. SEC
  • Whether advisers appropriately consider the relevant factors when recommending or providing advice, including: cost, investment product or strategy objectives and characteristics (e.g., liquidity, lock-up periods, volatility), the likely performance in varying market/economic conditions, time horizon, cost of exit. SEC
  • Whether advisers seek best execution (for client trades) with the goal of maximizing value for clients under the circumstances of the transaction. SEC
• Investment products/strategies flagged for special attention:
  • Alternative investments (e.g., private credit, private funds with long lock-ups). SEC+1
  • Complex investments (e.g., ETFs wrapping less liquid underlying strategies, option-based ETFs, leveraged/inverse ETFs). SEC+1
  • Products that carry higher investing costs (e.g., high commissions or higher investment expenses compared to similar products). SEC+1
• Advisers to specific investor groups or with particular business models:
  • Advisers recommending to older investors / those saving for retirement (and likely to have longer horizons, possibly less liquidity). psca.org+1
  • Advisers to newly launched private funds; advisers that have not previously advised private funds (looking at valuation, liquidity, fees, side letters, differential treatment of investors). SEC+1
  • Advisers that are dually registered as broker-dealers, or where an adviser uses third-parties to access client accounts (creating potential conflicts). SEC
  • Advisers that have recently merged or been acquired, where operational/compliance risks may increase. SEC

B. Effectiveness of Advisers’ Compliance Programs

• The SEC will review advisers’ compliance programs (policies, procedures) across core areas: marketing, valuation, trading, portfolio management, disclosures/filings, custody. SEC
• The inquiry will include whether the compliance policies/procedures are implemented and enforced, not just on paper. SEC
• Conflicts of interest: whether the disclosures address fee-related conflicts, particularly in connection with adviser compensation structures, account/product structuring. SEC
• Examinations may focus on advisers whose business models/operations are changing (e.g., offering new asset types, using new technology) to see whether the compliance programs remain appropriate. SEC

C. Never-Examined Advisers and Recently Registered Advisers

• The Division continues to prioritise examinations of advisers that have never been examined and those that are recently registered. SEC+1
• The rationale: to encourage the establishment and maintenance of robust compliance programs early in their lifecycle. SEC

II. Investment Companies (Mutual Funds, ETFs, etc)

• The SEC continues to prioritise examination of registered investment companies (“RICs”) because of their importance to retail investors and retirement-savings vehicles. SEC+1
• Typical examination scope: compliance programs, disclosures and filings (e.g., summary prospectus), governance practices. SEC
• Specific operational/strategic areas of focus:
  • Funds that participate in mergers or similar transactions — operational and compliance challenges associated with those. SEC
  • Funds employing ** less liquid or illiquid investments**, or complex strategies (for example closed-end funds, funds using leverage) — valuation, liquidity and conflict-of-interest issues. SEC+1
  • Funds with novel strategies or investments, including those with leverage vulnerabilities. SEC
• As with advisers, priority also given to funds that have never been examined or are newly registered. SEC

III. Broker-Dealers

A. Financial Responsibility and Customer Protection

• The SEC will examine broker-dealers for compliance with rules such as net capital, customer protection, liquidity and resiliency (especially with third-party vendors, cash-sweep programs, prime brokerage). SEC+1
• Focus on operational/compliance risks: e.g., vendor-risk management, counterparty risk, liquidity risk. SEC+1

B. Trading-Related Practices and Services

• Reviews will cover extended hours trading, municipal securities (including variable rate demand obligations/rate-reset VRDOs) and other fixed income trading practices. SEC
• Order routing and execution practices: best execution, pricing of illiquid instruments, alternative trading systems. SEC
• For example, whether broker-dealers appropriately rely on the bona fide market-making exception under Regulation SHO. SEC

C. Retail Sales Practices, Including Compliance with Regulation Best Interest (Reg BI)

• Broker-dealers will be examined for whether recommendations are in clients’ best interests (not placing broker’s interests ahead of the client’s) and whether disclosures (e.g., Form CRS) are appropriate. Stinson+1
• Particular focus: recommendations to older investors, those saving for retirement or college; product menus; limited product offerings; suitability in context of client’s background and investment objectives. psca.org+1

IV. Self-Regulatory Organisations (SROs) / Market Infrastructure

• The SEC will examine entities like national securities exchanges, clearing agencies, and entities subject to the Regulation Systems Compliance & Integrity (SCI) regime for compliance with rules, vendor/operational risk, incident-response, etc. SEC
• For designated systemically important clearing agencies: risk management, liquidity/default management, vendor/operations. SEC

V. Other Market Participants

• Municipal advisors: The Division will review whether they meet fiduciary duties to municipal entity clients (e.g., advice on pricing/methods of sale of municipal securities) and comply with core standards of conduct (e.g., Municipal Securities Rulemaking Board Rule G-42). SEC
• Transfer agents: Focus on processing of items/transfers, safeguarding funds/securities, record-keeping/retention, and compliance with amended Regulation S-P for covered institutions (incident response program, vendor oversight). SEC
• Funding portals: For entities operating as funding portals (under the Jumpstart Our Business Startups Act a/k/a “JOBS Act”), Examination will review arrangements with third-parties for investor funds, policy/procedure design, and once the compliance date hits, adequacy of incident-response, vendor oversight under Reg S-P. SEC
• Security-based swap dealers (SBSDs) and SBSEFs: The Division will focus on SBSDs for compliance with reporting obligations (e.g., under Regulation SBSR), margin/capital/segregation; SBSEFs will be examined for rules and internal procedures for trade monitoring, trade processing, participation oversight. SEC

VI. Risk Areas Impacting Various Market Participants (Cross-Cutting Risks)

A. Information Security & Operational Resiliency

• Cybersecurity remains a major priority: registrants’ ability to prevent interruptions, protect investor information and assets, governance practices, data loss prevention, access controls, incident-response (including ransomware). SEC+1
• Compliance with Regulations S-ID (identity theft) and S-P (safeguards rule, disposal rule, incident-response obligations) for covered institutions: ensuring policies/procedures for vendor oversight, incident response. SEC

B. Emerging Financial Technology

• Focus on registrants’ use of automated investment tools, AI, trading algorithms/platforms, and alternative data sources. SEC+1
• Key themes:
  • Whether representations about a firm’s AI capability are accurate.
  • Whether the records and disclosure are consistent with how the tools are used.
  • Whether the automated advice/recommendations align with investors’ profiles, strategies and regulatory obligations (especially for retail and older investors). AInvest+1

C. Regulation Systems Compliance & Integrity (SCI)

• For entities subject to the SCI regime: examinations will review incident-response programs, vendor risk, oversight of indirect systems, and whether confidence in market infrastructure (e.g., exchanges, clearing) is maintained. SEC

D. Anti-Money Laundering (AML)

• The Division will review whether broker-dealers and certain registered investment companies have AML programs appropriately tailored to their business, including: independent testing of the program; customer identification programs (including beneficial owner identification of legal-entity customers); suspicious-activity reporting; and sanctions compliance. SEC

VII. Compliance with New Rules and Regulatory Developments

• The 2026 priorities emphasise compliance with newer regulatory requirements, for example the 2024 amendments to Regulation S-P (privacy of consumer financial information and safeguarding customer information) which apply to investment advisers, investment companies, broker-dealers, transfer agents, funding portals. SEC
• Firms should monitor how changing market operations, product innovation, business model shifts, and technology use align with evolving expectations of the SEC’s examiner program (which uses risk-based strategies) rather than checking “off the list”. SEC

Key Implications for Firms

• Firms should review and update their conflict-of-interest frameworks, disclosures, compliance programs (especially for newer or alternative business lines).
• Firms offering products to older investors or retirement‐savers should pay particular attention to whether product recommendations align with investor objectives, risk tolerance, and cost/exit liquidity.
• Firms using alternative or illiquid strategies, private credit, ETFs with complex strategies, should examine their valuation, liquidity, fee, and disclosure practices in light of heightened scrutiny.
• Firms using AI/automation/trading algorithms must ensure their representations are accurate, oversight is in place, controls exist, and disclosures align.
• Firms acting as or relying on third-party vendors (custody, access, data, platforms) should ensure their vendor-risk management, incident response, cyber-security, identity-theft programs are robust and documented.
• Firms that are newly registered or have never been examined should treat this as an opportunity to build strong compliance programs rather than hope to avoid review.
• Firms should note that crypto/digital-asset specific language is less prominent in this year’s priorities (though not eliminated as an area of exam focus).* cryptoslate.com+1

* While the document does not highlight crypto as its own category, that does not mean crypto-related activity is exempt from review; rather, it’s subsumed under broader risk categories.